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Self-service online portals: The next logical step for compliance and onboarding?

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Self-service online portals: The next logical step for compliance and onboarding?

November 2012

Marc MurphyCEO

We are currently experiencing an unprecedented series of new regulations, each of which will require the collection of new client/entity data and support documentation to achieve full compliance. The problem is that each of these regulations will dictate the collection of new pieces of data – some looking for Tax Identification Numbers (TIN) or US indicia (FATCA) or others requiring new identifiers for entities (LEI).

We are currently experiencing an unprecedented series of new regulations, each of which will require the collection of new client/entity data and support documentation to achieve full compliance. The problem is that each of these regulations will dictate the collection of new pieces of data – some looking for Tax Identification Numbers (TIN) or US indicia (FATCA) or others requiring new identifiers for entities (LEI).

Inevitably, all of this will place an added strain on already stretched compliance teams within financial institutions. Recently, there have been a number of announcements and news articles focused on the idea of online self-service portals to collect client data and automate the verification and processing operations that accompany this.

The way these online portals would potentially work is that financial institutions would provide clients\legal entities with a secure URL and a log-in to a self-service portal. To simplify the process, the user would be guided through a step-by-step process to make sure that all information required is submitted. The solution could also verify data in real-time as the process is being completed before it reaches the master data source, saving time on the processing side and improving the quality of data and the reliability of supporting client documentation. Once data is received, the compliance team could then complete the compliance checks required and finalise processing.

There are many benefits to implementing a self-service portal of this type. Firstly, compliance teams can decrease the amount of downtime they experience while they wait for forms to be dispatched to clients, completed and returned by clients – usually by post or email. By using dynamically-driven questionnaires and mandatory fields, institutions can ensure that all required data is submitted and verified, reducing some of the impact on compliance processing. This also speeds up the time for financial institutions to achieve full compliance.

Data quality and integrity is another area that is set to benefit – by allowing clients to submit and update their own client data, out-of-date, incomplete or inaccurate data can be reduced or even eliminated. Operational efficiency is another anticipated benefit for the institution given the reduced amount of data entry that needs to take place. Information, once checked, can be appended automatically to the client’s record in multiple systems – contributing to a single client view across the institution.

Yes, the last few weeks have seen a number of comments claiming that it will involve a lot of development to get a system like this up and running, as well as the implementation of strict controls, processes and rules to improve its rigour and less susceptible to false information. But the point is it can be done! In fact, this is probably the next logical step in the way in which financial services interact and engage with clients – it’s certainly not a far cry from current interactive banking methods we see in retail banking.

And why stop at implementing this for new regulations? A system like this – implemented once – can be extended for other compliance processes such as Customer Due Diligence / Know Your Customer (CDD / KYC) and general client and product onboarding operations. The ability to centrally store all this information also enables financial institutions to reuse this data for other processes and regulations coming down the track, eliminating repeated requests for information – a key bugbear for clients.

In fact, this conversation has grown legs in the US where the idea for a centralised, self-service CDD / KYC process has been mooted by many leading financial institutions. The way it would work is that a client, who may be a client of several banks, would only have to self-certify and evidence for CDD / KYC once – the data and documentation being stored in a central repository in the cloud. The client’s banks can then visit the repository and pull down the data. A mere concept at the moment but not necessarily a far-fetched idea. The final consideration will come down to the clients themselves. Will they use a system like this? Could they trust uploading confidential information online? The answer is they are already doing it on daily basis – adding payment information on websites, emailing personal and corporate documentation back and forth. In fact, this system, with the right controls and security in place, could be a safer way to collect and collate data.

By empowering clients to manage their own data and by speeding up the compliance and onboarding processes, self-service portals can actually result in a better, more satisfied client experience, making them far less cumbersome and time-consuming that what they currently are. Benefits for clients; benefits for the financial institution. Win-win.